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How To Start An HR Consulting Business?

6 Steps To Successfully Launch Your New Independent HR Consultancy

I am wondering how to start an HR consulting business?

There's a lot to observe after the global pandemic, and there's a lot more to be optimistic about too.

Even with the increase of HR Tech, artificial intelligence, and machine learning, there is a massive market for new startup HR consultancies to help employers get the best out of their human resources.

There is substantial potential business out there in all aspects of HR consulting, including generalist HR consulting, recruitment and selection, employee engagement, training, learning and development, employment law, and many more.

Here are six steps to guide you as you think about starting your Human Resources consulting business.

We have used and researched all tools and sites mentioned. We suggest you observe all options and remember, in these recommendations as in life, caveat emptor.

Note that these steps on opening a Human Resources company are for an independent HR consultant and small new HR consultancy to follow, not for large corporations or well-funded HR Tech startups.

A single Human Resources consultant or small HR consulting company needs a lean and agile approach, and these six steps reflect this need.

How Do You Set Up A HR Consulting Business?

Here are six steps to follow after starting your own HR business and when considering how to become a Human Resources consultant:

  1. Find Your 'Why' Determine your preferred style of business.
  1. Create a startup HR consultancy business plan and decide on the legal structure
  1. Plan your cash flow
  1. Start building a network now.
  1. Develop a startup sales and marketing plan for your HR consulting business
  1. Start building your online presence now.

Find you 'Why' Determine Your Preferred Style of Business.

You have seen Simon Sinek's speech, which coined the phrase: 'Find your Why.'

Before observing your entrepreneurial journey, it's essential to pause or reflect on what you want, how you want to achieve it, and how to start a consulting company.

Are you looking to make an asset that you can one day sell, and are you aiming for a more freelance lifestyle to make a new career path from your corporate life?

Will you be working towards a highly systemized, leveraged business that will expand rapidly and lead to a franchised business model?

Are you looking to pay bills or keep the lights on while working on an exciting new HR Tech product and information product on the side?

Will you be a generalist consultant? Do you plan to reduce your focus on a particular skill set or industry, such as this HR consultancy for the mining industry and this HR firm for fintech & financial services?

Note that distinct industries and business types have different types of budgets and projects.

In the episode on McDonald's vs. Burger King, McDonald's founder Ray Kroc has difficulty convincing the primary owners to expand with a national franchise. Instead, they preferred a more basic life based around one restaurant in one location.

They knew their preferred work style. They knew their Why.

Take time and think about what you want.

It's okay to change your plans as you progress but reflect on all the options before starting.

How To Be An HR Consultant – Make A Startup HR Consultancy Business Plan

It would help if you had a plan that would help you, not some lengthy time that rapidly gathers dust in the corner of your office.

With the tech world in the ascendancy, why not take a leaf out of their book and use the Canvas model to plan your HR consultancy startup?

Please start with the target HR client segments and their problems and then work through the boxes.

Working with this exercise will bring you back to your Find Your Why thinking as you commence to consider all the options as:

  • Are Generalist Human Resources consulting businesses?
  • Various industries or a small market segment?
  • Large employers, small employers, government, or others?
  • Small projects vs. large projects or retainer work?
  • Embedded roles, part-time, or other?

And so on.

Decide on the proper legal structure for your new HR consulting business.

By working via the lean canvas model and understanding who you'll be serving or how you'll serve the target audience, you'll then be in an excellent position to choose the proper legal structure for a Human Resources consulting business.

Depending on where you place in the world, you'll have many options to choose from:

  • Form a company
  • Generate your business as an independent HR consultant by establishing a sole proprietorship.
  • Contract through freelance sites.
  • Run a side hustle after-hours with these options listed above

Whatever you do, take advice from a qualified professional.

If you select to form a company, ask your local accountant.

You can also check out the company formation companies and online accounting firms as:

  • GovDocFiling in the US
  • Crunch in the UK
  • Accountant Online in Ireland
  • Xolo for Europe
  • Justine in Australia
  • And similar companies in other countries.

How To Open A Consultancy Firm – Plan Your Cash Flow

This section generally goes into the business planning stage and opens a consultancy firm, but it must deserve its step.

Consulting can be very lucrative, and the HR consulting business model is no exception.

When you're an employee, you get a payslip every month like clockwork.

As an employee, there are no extra expenses to pay.

That all changes the day you work as a beginner, independent HR consultant.

You have a wide range of setup costs and recurring expenses.

From the day you commence your new Human Resources consultancy, you begin prospecting for clients, pitching your services, and trying to get the project.

You then have to actually do the work.

You send in your invoice only after you've done the work.

Then you wait.

And wait some more.

You will hear all sorts of reasons that the money has not yet arrived. You missed the cut-off for Accounts Payable. They forgot to lodge your invoice, and it was incorrectly entered into the system. Mary in Accounts is still on holiday.

And so it goes.

It would be best if you had a plan. This may include:

  • Saving money before you commence the new HR business.
  • Lining-up 3 to 6 months of work before you even hand in your resignation letter to your employer.
  • Think starting part-time and as a side hustle.
  • Have entry-level services for rapid turnaround and faster invoicing as well as more extensive project work offerings.
  • They are productizing your knowledge. For instance, you could write ebooks or product HR-related templates for employers to use with their staff. In addition, you could sell seats on paid webinars like this enterprising HR business in New Zealand.
  • You are convincing your current employer to take you on a specific project as an external Human Resources consultant.

And so on.

HR Consultancy Startup – Start Building A Network Now

Knowing that there must be a starting dip in your income and that it will take time to get your first payments, you need to commence building your referral network before you even launch.

Make a list of family, friends, and former colleagues or people you've met along the way. Then, look at your list of LinkedIn connections.

Get back in touch with people. Ask them about your plans and ask for their help or to keep you in mind.

Develop A Lean Startup Sales and Marketing Plan For Your HR Consulting Business

Networking an audience aside, now it's time to write a marketing plan for your HR company.

There are various channels to choose from to acquire new Human Resources consulting clients. These include:

  • Search Engine Optimization
  • Content Marketing
  • Email Marketing 
  • Appearing on external blogs
  • Publicity/PR
  • Search Engine Marketing
  • Social Display Ads
  • Offline Ads
  • Engineering as Marketing
  • Viral Marketing
  • Business Partnerships
  • Sales & Business Development
  • Affiliate/Referral Programs
  • Existing Platforms
  • Trade Shows
  • Offline Events
  • Speaking Engagements
  • Community Building

I would emphasize that you should aim to choose two or three different marketing channels to try out. After that, it all gets a little too complex and a little messy.

Aim for one Fast and one Slow marketing method.

A rapid method would be running some ads on Google or picking up the phone and calling your top ten sales prospects.

A method would be writing blog articles and commenting on social media. Slow methods are like a snowball – microscopic when they start. Then, as they build momentum, they increase in size till they can even take over from the fast, paid marketing channel.

Start Building Your Online Presence Presence Now

Should you wait until you're ready to commence your business to launch an online presence?

I'm reminded of a proverb. "The best time to plant a tree was 15 years ago. The best time is now."

If I were starting over again, I wouldn't wait.

I would commence developing my online presence as I thought my own HR business was in my future.

I would adjust my LinkedIn profile to see my area of expertise and share more profile-building content.

Commencing an industry blog helps you build up contacts, develop future sales content, sell advertising space, and make your mailing list when you launch.

I advise you to purchase a website domain name and then host your website WordPress if you plan to run an HR business.

You can make a new blog and website using Wix.

You should also commence a private mailing list and email newsletter to expand your network and get new clients.

I used Mailchimp, but since it is a recent restructure, I switched to Mailerlite, which has a very inexpensive plan and has many powerful features worth the small investment. If you ever plan to commence an HR business, you should begin your mailing list right now. Seriously.

HR Consultant Career – A Good Option?

I'm asked if an HR consultant career is likely to be viable.

It's always a case of caveat emptor. Still, follow the steps listed above and use the various resources provided to you on this website and take action. Then, you'll give yourself a much better chance of success.

Conclusion

The five steps will help you plan about leaving your job and starting anew as a Human Resources consultant.

Work your way through the steps, and take action.

  1. Find You're 'Why' – Determine your preferred style of business.
  1. Make a lean startup HR consultancy business plan.
  1. Plan your cash flow
  1. Start managing a network now.
  1. Develop a lean startup sales and marketing plan for your HR consulting business

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